BP Plc has announced a significant agreement with Apollo-managed funds, paving the way for the acquisition of a 25% non-controlling stake in BP Pipelines, known as BP TANAP, for roughly $1 billion.
This deal represents the British energy giant’s initial divestment as part of its ambitious turnaround plan, signaling a renewed focus on its core strengths in fossil fuels.
TANAP holds BP’s 12% interest in the Trans-Anatolian natural gas pipeline, a crucial element of the Southern Gas Corridor.
This system transports natural gas from the Shah Deniz field in Azerbaijan, located within the Caspian Sea, through Turkey, ultimately reaching key European markets, including Italy and Greece.
The deal with Apollo is projected to be finalized in the second quarter, contingent upon customary regulatory approvals and the assent of other TANAP shareholders.
The proceeds from the transaction will contribute to BP’s stated goal of generating $20 billion through strategic divestments, as the company stated on Friday.
Under pressure: BP returns to its roots
BP’s strategic shift follows mounting pressure from investors, including the activist investor Elliott Investment Management, urging the company to reassess its direction.
After a decline in the company’s value during Murray Auchincloss’s first year as Chief Executive Officer, BP announced in February that it would refocus on its core business: the production and processing of fossil fuels.
This comes after previous attempts to move away from hydrocarbons.
This renewed focus includes a $20 billion divestment program planned to be completed by the end of 2027 to improve the company’s cash flow and financial flexibility.
“This unlocks capital from our global portfolio while retaining our role in this strategic asset for bringing Azerbaijan gas to Europe,” BP Executive Vice President William Lin said in the statement.
This emphasizes the company’s intent to streamline assets while continuing to play a vital role in ensuring Europe’s energy security through the Southern Gas Corridor.
This deal proves their ability to be a part of the process, while working on maintaining their own assets.
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